In possible trade war, India doesn’t have much flexing power: ASSOCHAM
The Dollar Business Bureau
Though India’s trade deficit may reach around $150 billion annually and the level of imports is much higher over exports, the country doesn’t have much flexing power, it the world witnesses an escalation in trade war, said the industry body Associated Chambers of Commerce of India (ASSOCHAM).
“We cannot flex too much of our importing muscle, even if our exports face consequences of trade war and are subjected to tariff barriers,” ASSOCHAM in a statement on Sunday.
The industry body pointed out that the best course in this situation would be to continue our engagement with the key trading partners, without aligning ourselves too much into a single bloc.
“Wherever, our exports are affected, we must engage bilaterally and use the channel of the World Trade Organisation (WTO) in a rule based manner. However, the WTO route could be time consuming. So, the best course would be to stay bilaterally engaged,” it said.
ASSOCHAM noted that India may end up with hefty imports of about $450 billion in the current fiscal against exports of around $300 billion. Nearly one-fourth of the imports would be from the shipments of crude and other related items.
In addition, there are essential items for imports such as fertiliser and plastics for which India does not have an immediate local capacity.
As far as India is concerned, even if we want to retaliate we cannot do it without pain since, our imports are of essential nature, ASSOCHAM argued.
“However, even before the break out of the trade war, India has seen a huge jump of 21% annualised rise in steel imports at $1.15 billion in February, 2018 and non-ferrous metals by 33% at $1 billion,” the statement said.
“Yes, India should be watchful about a sudden jump in steel imports since we have enough domestic capacity available. Similar is the position with coal and related products for which domestic output can be and should be ramped up,” it added.